Do We Need A Decentralized Ordinals Marketplace?
In recent days, a fiery discussion has taken hold within the Bitcoin community, centering around a groundbreaking approach to producing Ordinal Inscriptions.
In recent days, a fiery discussion has taken hold within the Bitcoin community, centering around a groundbreaking approach to producing Ordinal Inscriptions. This innovative technique involves creating unique digital artifacts for individual Satoshis, the tiniest fractional unit of Bitcoin, by harnessing the capabilities of Taproot and Segwit witness data. This allows for storing a wide range of multimedia, including videos, JPEGs, and even playable games.
However, not all members of the community have embraced this novel approach. Nonetheless, Ordinals are here to stay. Ordinal Inscriptions will revolutionize the bitcoin community offering a truly decentralized marketplace.
Centralized NFT Marketplaces: Where Ownership is Illusory
In the NFTs sphere, marketplaces rely on decentralized and public blockchains to mint and store these unique assets, providing collectors with a sense of ownership and decentralization. However, due to large file sizes, the actual files associated with these NFTs are often stored off-chain while the tokens remain on-chain. As a result, the true value of NFTs is centralized and not decentralized, creating potential risks and limitations.
Jonty Wareing discovered in March 2021 that many NFTs are stored in centralized locations, pointing to a Web2 URL or IPFS hash, despite being represented on decentralized blockchains. This hidden centralization poses significant risks, such as losing asset value if the Marketplace gateway is shut down. Centralized databases also lack transparency and interoperability and are vulnerable to theft, loss, and censorship.
Decentralized Marketplace for Ordinals
With a decentralized marketplace, individuals who own an ordinal inscription can quickly put it up for sale. They create a partially signed bitcoin transaction and send it to the bitcoin network. Anyone interested in buying can view the offer and pay the amount asked for the other signature, which is required to complete the transaction.
What makes this marketplace so unique is its decentralized nature. There is no central authority controlling the transaction, no middlemen taking a sale cut, and no need to trust any third party to handle the exchange. Instead, the transaction is processed through the secure and transparent blockchain network, ensuring that both the buyer and seller are protected.
This decentralized approach offers several advantages for both buyers and sellers. For sellers, they can set their own price without needing to pay fees to a centralized exchange or auction house. They can also reach a broader audience since the marketplace is accessible to anyone with an internet connection.